The Home Office has admitted that administrative errors led to migrants being wrongly refunded at least £18.7 million through the Immigration Health Surcharge (IHS) scheme, with officials warning it may not be possible to recover the money.
According to the department’s 2025/26 Annual Report, foreign nationals were mistakenly reimbursed for periods they were not entitled to claim after officials made payments that were “not aligned with the underlying IHS payment.”
The Immigration Health Surcharge requires most overseas workers to pay £1,035 per year for NHS access, while students and children pay £776 annually.
The report states that the Home Office is exploring ways to recover the funds but concedes that “recoverability remains uncertain.
The reimbursement error was one of several costly failures disclosed in the annual accounts, with the department revealing losses and wasteful spending approaching £100 million.
Among the largest was £22.9 million spent leasing the Atrium Hotel in Hounslow, west London, which remained empty throughout a nine-month contract after expected asylum pressures failed to materialise.
The Home Office also disclosed £3.2 million in “fruitless payments” for deportation flights that were cancelled before take-off.
Elsewhere, the department wrote off £35.2 million after abandoning a troubled contract with CGI IT UK Ltd to modernise the Police National Database. The project was terminated following repeated delays, rising costs and the failure to produce a credible delivery plan.
A further £14.9 million was lost on the former Ministry of Defence site at Northeye, East Sussex, which had been earmarked to house asylum seekers. The site was never used after remediation costs proved prohibitively expensive, forcing the Home Office to write off its entire investment.
The disclosures are likely to intensify scrutiny of the department’s financial controls and management of asylum, immigration and IT projects at a time when public spending remains under pressure.
Shadow Home Secretary Chris Philp said: “This is a catastrophic waste of taxpayers’ money by this inept Labour government. Since the election 76,000 illegal immigrants have crossed the Channel, more than under any other prime minister.
The solution to this is not to put them up in hotel accommodation or anywhere else, which costs hard-pressed British taxpayers billions.
The solution is to leave the European Convention on Human Rights which will enable us to deport all illegal immigrants within a week of arrival. Then, pretty quickly, the crossings will stop.
At a time when families struggle to make ends meet and everyone faces ever higher taxes, it is galling that the Labour government is wasting so much of our money on failed projects designed for illegal immigrants.
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